7-33 Purchases Budget Green Lighting Supply plans inventory levels (at cost) at the end of each month as follows: May, $271,000; June, $226,000; July, $209,000; and August, $241,000. Sales are expected to be June, $449,000; July, $359,000; and August, $306,000. Cost of goods sold is 65% of sales. Purchases in April were $258,000 and in May they were $188,000. Payments for each month’s purchases are made as follows: 15% during that month, 70% the next month, and the final 15% the next month. Prepare budget schedules for June, July, and August for purchases and for disbursements for purchases.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
7-33 Purchases Budget
Green Lighting Supply plans inventory levels (at cost) at the end of each month as follows: May, $271,000; June, $226,000; July, $209,000; and August, $241,000.
Sales are expected to be June, $449,000; July, $359,000; and August, $306,000. Cost of goods sold is 65% of sales.
Purchases in April were $258,000 and in May they were $188,000. Payments for each month’s purchases are made as follows: 15% during that month, 70% the next month, and the final 15% the next month.
Prepare budget schedules for June, July, and August for purchases and for disbursements for purchases.
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